While Joelle O'Reilly-Hyland could speak at length about what hedge funds are, and she's happy to do just that for anyone who asks her to do so, most people are content with a short description that they can build upon in appointments they make with their own financial planners. Joelle O'Reilly-Hyland tells investors like this that hedge funds are, in essence, investment partnerships set up by money managers. These partnerships have long and complicated rules that specify how the investments will be run, who will get paid, and how the money will be distributed. Some hedge funds even provide information about how well the fund has performed in the past, allowing investors to get a glimpse of how well they might do in the future.
Hedge funds can be quite different from one another in some very crucial ways, Joelle O'Reilly-Hyland says. Some funds base their performance on gains in the stock market, so investors only make money when the stock market gains in value. Other funds base their performance on losses in the market, betting that high prices now will translate into lower prices in the future. While investors might not need to know these details right off the bat, they can be a key indicator of performance, Joelle O'Reilly-Hyland says, and they shouldn't be ignored as a result.
Working with an expert is the best way to ensure that good decisions are made about investments, Joelle O'Reilly-Hyland says, but hired help will never substitute for individual investor education. When it comes to money, knowledge will always be power.